Don't consider investing in UNICHEMLAB now, it is risky at the moment

UNICHEM LABORATORIES LTD significantly underperformed today. It returned -2.6% to close at 208.15. It's recent 5 day performance has been +2.13%, +4.08%, +1.46%, +0.92% and +0.26%.

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UNICHEMLAB showed a flat trend over the last 3 months. During this period UNICHEMLAB returned +0.48% and saw a maximum drawdown of -14.2%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in UNICHEMLAB till volatility reduces and a clear trend emerges.

Trend

Monthly Performance

Alpha (outperformance)

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Volatility

Return distribution

UNICHEMLAB has been outperforming the NIFTY-50 index in recent time. Over the last 3 years and 1 month, UNICHEMLAB underperformed the NIFTY-50 index on 56% days.

During the last three months UNICHEMLAB delivered losses on 59% days. However, it still managed to end this period in a profit. It's best return during this period (of +5.61%) was on Tuesday, 27 Nov, 2018. While it's worst loss in the same period (of -3.37%) was on Tuesday, 23 Oct, 2018. There was initially a bearish trend during this period which started on 28 Nov, 2018 and went on till 10 Dec, 2018. The trend delivered -11.12% losses to investors. This was followed by a bullish trend that started on 10 Jan, 2019 and ended on 17 Jan, 2019. This bullish trend delivered +9.78% to investors.

On monthly basis, UNICHEMLAB delivered losses in more months over the last year, than profits. UNICHEMLAB delivered profits less regularly than NIFTY-50 index. UNICHEMLAB was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -15.14% compared to -6.42% returned by NIFTY-50 index in Sep 2018. UNICHEMLAB had a longer winning streak of losing months than NIFTY-50 index. It went down in 6 straight months (from Feb 2018 to Jul 2018) during which period it delivered -40.01%. It is interesting to note that both UNICHEMLAB and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Too many people spend money they earned..to buy things they don't want..to impress people that they don't like.
-- Will Rogers

UNICHEMLAB is becoming more volatile overall. In comparison, the NIFTY-50 index is seeing a fall in volatility. During the last three months, there was a significant fall in UNICHEMLAB's volatility from 23 Oct, 2018 to 2 Jan, 2019. While there was a significant fall in the NIFTY-50 index's volatility from 31 Oct, 2018 to 5 Dec, 2018.

Advanced/professional short-term investors should note that UNICHEMLAB has significant negative skewness in it's return distribution. This indicates that UNICHEMLAB is very risky for short-term investment and can significantly underperform for long durations.

UNICHEMLAB has more chance of extreme outcomes than the NIFTY-50 index. Therefore, UNICHEMLAB must receive a lower allocation than NIFTY-50 in your portfolio. NIFTY-50 index usually has shorter drawdown period than UNICHEMLAB.

On a general note (since you are interested in UNICHEMLAB), if you are an investor in ~HOMEAPPLIANCES, you need to be extra careful (consider limiting your exposure or diversifying) as it is extremely unpredictable and therefore risky.